Bulgaria plans first-pillar ‘Silver Fund’

“In accordance with a provision of the 2006 budget law, we are preparing a draft law on a Silver Fund to strengthen the financial stability of the first pension pillar in the context of an ageing population which will be submitted to parliament by June 30 2006,” officials wrote to the International Monetary Fund.

“The first (public) pension pillar is losing resources because of the reduction of contribution rates and the increase in contributions directed to the second (private) pillar to 4% in 2006 and 5% in 2007.

“Nonetheless, with a dependency ratio of now below 1, continued implementation of the 1999 pension reform (notably the gradual increase in the retirement age), and future application of the legally enshrined indexation formula, we expect the public pension finances to remain under control.”

The comments come in a Letter of Intent to IMF managing director Rodrigo de Rato, dated March 14. It was signed by finance and economics ministers Plamen Oresharski and Rumen Ovcharov and central bank governor Ivan Iskrov.

“We will strive to keep the finances of the public pension system sound and strengthen those of the health care system while initiating reform of the education system,” the letter states.